Question

Analyze the idea of free trade.

Answer 1

Free trade between two or more nations is defined as a free flow (exports and imports ) of goods and services without any controlling measures , restrictions,taboos ,barriers etc . If a free trade agreement is signed between two nations it means we can easily export and import commodities that are to be traded without any tariffs,duties ,taxes etc . We see several outcomes out of free trade, some of them are

1) Increase in exports and imports ,goods and services that are cost effective to consumers.

2) Consumers benefit and local producers may be affected owing to the competition of foreign companies and vice versa.

3) Economic growth is seen ,we can put a check to scarcity of goods and services because of free trade easily .

4) Labourers who work in competitive industries gain with high salaries whereas the labourers in uncompetitive industries may be sacked .

5) Markets are set free and unrestrained to goods and services and information.

6) Farmers may be affected because of it as nations may get the agricultural output from its partner nations at cheaper price than that of their own . Mostly farmers in developing nations are affected .

7) Economic ties among nations may be strengthened with less government interference and markets' more access to international production.

8) Environmental standards may not be followed at some stages which may affect out environment .

9) Quality norms may be violated and when these quality less goods enter domestic market ,they will be highly successful because of less costs which affect the domestic industries as they may go insolvent .

10) Surplus raw materials can be exported and scarce raw materials can be imported which triggers the growth of new industries .

11) Scope for more foreign direct investments (FDAs) will be high .

12) Some issues may arise patent rights may be illegally used , new inventions may be stolen .

13) Income generated by taxes and duties will be less . Some traditional workers may get affected because of the advent of modern goods and services.

14) We can put a halt to the authority of monopolists and encourage industrial competitiveness .

15) Countries can be exposed to threats as they are over dependent on one another .

To conclude free trade has both its pros and cons ,when signed nations should be wary of outcomes in advance.

Thank you.